Greece resumes talks with lenders to exit bailout

Greece’s government will resume stalled talks with EU/IMF lenders in Paris today (25 November), as Athens pushes to conclude a review by inspectors so it can make an early exit to an unpopular bailout programme.

Athens had set a 8 December deadline to complete the review. But talks floundered over a projected 2015 budget gap and EU/IMF inspectors did not return as expected to Athens this month, leading to concerns that any delays would derail Greece’s plan to quit its bailout by the end of the year.

The two sides will meet in Paris “to advance the review and examine the framework for the day after” the bailout ends, the Greek Finance Ministry said in a statement.

Deputy Prime Minister Evangelos Venizelos said the aim remained to conclude the review by 8 December, when eurogroup finance ministers will meet, and that the troika – a team of officials from the IMF, European Commission and European Central Bank – would return to Athens after the Paris talks.

“We are on a good path, difficulties are significant but a solution will be found,” he told reporters after meeting Prime Minister Antonis Samaras.

“Measures that will annoy citizens will not be taken. This is a fundamental decision from which we will not stray.”

Greece’s government has staked its own survival on abandoning ahead of schedule the 240 billion euro bailout programme, which has entailed unpopular austerity measures.

Samaras needs to push through his candidate in a presidential vote in February to avoid being forced to call early elections and is hoping exiting the bailout will help win him enough support to survive the vote.

But the final bailout review, like most reviews before it, has struggled amid rows over reforms and austerity cuts.

Athens and its foreign lenders have been at loggerheads over the projected deficit for next year, with the lenders saying Greece will miss the target of 0.2% of gross domestic product because of a new payback plan for austerity-hit Greeks who owe money to the state.

The Greek government, however, has so far resisted changes demanded by the inspectors, going so far as to submit its 2015 budget to parliament last week without the approval of lenders.

Background

After two international bailouts totalling 240 billion euros since 2010, when private investors refused to lend to Athens any more, Greece wanted to switch back to market financing from the start of next year, instead of 2016 as originally planned.

But markets reacted nervously to the plan, worried that Athens would no longer have any financial backup. Greek benchmark 10-year bond yields rose to 8.9% in late October from 5.6% in early September.

Eurozone finance ministers backed a precautionary credit line for Greece on 6 November, which would be needed after the country eventually exits its bailout at the end of the year.